exh10_1.htm


     

    EXHIBIT 10.1


    CPI
CORP.

     

    NONSTATUTORY STOCK OPTION
AGREEMENT

    
 

     

    THIS
NONSTATUTORY STOCK OPTION AGREEMENT (the “Agreement”) is made effective as of
_____________, 2008 (the “Grant Date”), between CPI Corp., a Delaware
corporation (the “Company”), and ____________ (the “Employee”), pursuant to the
CPI Corp. Omnibus Incentive Plan (the “Plan”).  Capitalized terms not
otherwise defined herein shall have the meaning assigned to such terms in the
Plan.

     

    In
consideration of the premises, mutual covenants and agreements herein, the
Company and the Employee agree as follows:

     

    1. Grant of
Option.  The Company hereby grants to Employee an option (the
“Option”) to purchase all or any part of an aggregate of __________ Shares on
the terms and conditions set forth herein.  The Option shall not constitute an
“incentive stock option” within the meaning of Section 422 of the
Code.

     

    2. Option
Price.  The purchase (exercise) price for each Share issuable
upon exercise of the Option shall be $ __________, being 100% of the Fair Market
Value per Share on the Grant Date.

     

    3. Vesting.

     

    (a)           Subject
to Section 5 hereof, the Option shall vest and become exercisable upon the
occurrence of the conditions set forth below:

     

    (i)           This
Option shall become vested with respect to one-third (1/3) of the total number
of Shares described in Section 1 hereof on the first anniversary of the Grant
Date and thereafter shall become exercisable upon the achievement of the First
Target Stock Price (for the avoidance of doubt, if the First Target Stock Price
is achieved after the Grant Date but before the first anniversary of the Grant
Date, such one-third of the Option shall become immediately exercisable upon the
first anniversary of the Grant Date);

    


    (ii)           This
Option shall become vested with respect to an additional one-third (1/3) of the
total number of Shares described in Section 1 hereof on the second anniversary
of the Grant Date and thereafter shall become exercisable upon the achievement
of the Second Target Stock Price (for the avoidance of doubt, if the Second
Target Stock Price is achieved after the Grant Date but before the second
anniversary of the Grant Date, such additional one-third of the Option shall
become immediately exercisable upon the second anniversary of the Grant Date);
and

    


    (iii)           This
Option shall become vested with respect to the final one-third (1/3) of the
total number of Shares described in Section 1 hereof on the third anniversary of
the Grant Date and thereafter shall become exercisable upon the achievement of
the Third Target Stock Price (for the avoidance of doubt, if the Third Target
Stock Price is achieved
after the Grant Date but before the third anniversary of the Grant Date, such
final one-third of the Option shall become immediately exercisable upon the
third anniversary of the Grant Date).

    


       (b)    Notwithstanding the
vesting schedule set forth in Section 3(a), this Option shall become immediately
vested and exercisable as to any Shares that have not otherwise vested as of a
Change of Control 

                of  the Company (as defined
below).

    


    (c)    For purposes
of this Option, the following terms shall have the following
meanings:

     

                    “Cause” shall mean (i) conduct
or activity of the Employee materially detrimental to the Company’s or any
Subsidiary’s reputation or business (including financial) operations;
(ii) gross  or  habitual  neglect
or breach of duty or misconduct of the Employee in discharging the duties of his
or her position; (iii) repeated unfitness or unavailability for service,
disregard of the Company’s   rules or policies
after reasonable
notice and opportunity to cure, or engaging in conduct not becoming of a senior
manager of the Company; or (iv) prolonged absence by the Employee from his or
her duties 

                (other than
on account
of illness or disability) without the consent of the Company.

     

                    “Change of Control” shall mean
a change in control of a nature that would be required to be reported in
response to Item 5.01 of the Current Report on Form 8-K, as in effect on the
date hereof,  

                pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)
or would have been required to be so reported but for the fact that such event
had been “previously 

                reported” as that
term is defined in Rule 12b-2 of Regulation 12B of the Exchange Act unless the
transactions that give rise to the Change in Control are approved or ratified by
a majority of the members of 

                the Incumbent Board
who are not participants in the Plan; provided that, without limitation,
notwithstanding anything herein to the contrary, a Change in Control shall be
deemed to have occurred if (i) any 

                Person is or becomes
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing more than 40% of the
combined voting power of 

                the Company’s then
outstanding securities ordinarily (apart from rights accruing under special
circumstances) having the right to vote at elections of directors (“Voting
Securities”), (ii) individuals who 

                constitute the
Incumbent Board cease for any reason to constitute at least a majority thereof,
or (iii) the stockholders of the Company approve a reorganization, merger or
consolidation with respect to which 

                persons who were the
stockholders of the Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own, directly or indirectly, more
than 50% of the 

                combined voting power
entitled to vote generally in the election of directors of the reorganized,
merged or consolidated corporation’s then outstanding voting securities, or a
liquidation or dissolution of the 

                Company or of the
sale of all or substantially all of the assets of the Company.  For
purposes of this Agreement, the term “Person” shall mean and include any
individual, corporation, partnership, group, 

                association or other
“person,” as such term is used in Section 14(d) of the Exchange Act, other than
the Company or any employee benefit plan(s) sponsored or maintained by the
Company.  For these 

                purposes, “Incumbent
Board” shall mean the individuals who constitute the Board on the Grant Date;
provided that any person becoming a director subsequent to the Grant Date whose
election, or 

                nomination for
election by the Company’s shareholders, was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board (either by a
specific vote or by approval of the 

                proxy statement of
the Company in which such person is named as a nominee for director, without
objection to such nomination) shall, for purposes of this Plan, be deemed a
member of the Incumbent 

                Board.

     

    “First Target Stock Price”
shall mean the closing price of a Share on the New York Stock Exchange exceeds
$25.00 for at least 20 consecutive trading days after the Grant
Date.

     

    “Second Target Stock Price”
shall mean the closing price of a Share on the New York Stock Exchange exceeds
$45.00 for at least 20 consecutive trading days after the Grant
Date.

     

    “Third Target Stock Price”
shall mean the closing price of a Share on the New York Stock Exchange exceeds
$65.00 for at least 20 consecutive trading days after the Grant
Date.

     

    4. Term.  Subject
to earlier termination as provided in Section 5 hereof, the Option shall
terminate, and be of no force or effect after 5:00 p.m. (Eastern Time), on the
tenth (10th) anniversary of the Grant Date (the “Expiration Date”).

     

    5. Effect of
Termination of Service.  In the event of Employee’s Termination
of Service, then (i) all further vesting of Employee’s rights with respect to
the Option under Section 3 hereof shall immediately cease and (ii) any then
unvested portion of the Option shall be immediately cancelled and forfeited by
the Employee for no consideration.  The Option shall terminate and
lapse upon a Termination of Service as follows:

     

    (i)  immediately upon
Employee’s Termination of Service for Cause;

    


    (ii)  90 days after any
voluntary Termination of Service by the Employee; or

    


    (iii)  one year after the
Employee’s Termination of Service on account of death or Disability, or an
involuntary Termination of Service by the Company without Cause;

    


    provided however that in no
event shall this Option remain exercisable beyond the Expiration
Date.

     

    6. Nontransferability.  The
Option shall not be transferable other than by will or the laws of descent and
distribution, and any permitted transferee shall take the Option subject to all
of the terms hereof.  During the lifetime of the Employee, the Option
may be exercised only by the Employee or, in the case of the Employee’s
Disability, the Employee’s duly authorized representative.  Following
the death of the Employee, the Option may be exercised only by the Employee’s
executor, administrator or permitted transferee as provided
above.  Without limiting the generality of the foregoing, the Option
may not be assigned, transferred (except as provided above), pledged or
hypothecated in any way, shall not be assignable by operation of law, and shall
not be subject to execution, attachment or similar process, and any attempt to
do so shall be void.

     

    7. Method of
Exercise.

     

    (a) Subject
to the terms and conditions of this Agreement and the Plan, the Option may be
exercised, in whole or in part, to the extent then exercisable, at any time
prior to its expiration as provided in Section 3, Section 4 or Section 5
hereof.  Any such exercise shall be effected by a written notice
delivered to the Secretary of the Company at its principal executive office, in
such form as the Company may prescribe, and shall be signed by the person or
persons so exercising this Option.  In the event this Option shall be
exercised pursuant to Section 6 hereof by any person other than the Employee,
such notice shall be accompanied by appropriate proof of the right of such
person to exercise the Option.  Any notice of
exercise delivered under this Section 7 shall state the number
of Shares in respect of which the Option is being exercised, and shall be
accompanied by full payment for the Shares with respect to which the Option is
exercised (in the form permitted in Section 7(b) hereof).  If the
Option is exercised by any person or persons other than the Employee under
Section 6 hereof, then the notice shall be accompanied by appropriate proof of
the right of such person or persons to exercise the Option.

     

    (b) The
exercise price of the Option (or portion thereof being exercised) may be paid
(i) in United States dollars in cash or by check; (ii) through delivery of
Shares owned by Employee having a Fair Market Value equal as of the date of the
exercise to the exercise price of the Option; or (iii) by having the
Company retain from the Shares otherwise issuable upon exercise of the Option, a
number of Shares having a Fair Market Value equal, as of the date of exercise,
to the exercise price of the Option (a “net-exercise”); or (iv) by any
combination of (i), (ii), or (iii) above.

     

    (c) The
Company shall have the right to deduct from any compensation or any other
payment of any kind due the Employee, the amount of any federal, state or local
taxes required by law to be withheld as the result of any exercise of this
Option.  In lieu of such deduction, the Company may require the
Employee to make a cash payment to the Company equal to the amount of taxes
required to be withheld.  If the Employee does not make such payment
when requested, the Company may refuse to issue any Shares under this Option
until arrangements satisfactory to the Company for such payment have been
made.

     

    8. No Rights
of a Shareholder.  The Employee
shall not have any of the rights of a shareholder of the Company with respect to
the Shares that may be issued upon the exercise of the Option until such time as
the Shares are issued to the Employee following an exercise.  No
adjustment shall be made for dividends or other distributions made by the
Company to its shareholders or other rights for which the record date is prior
to the date on which the Employee is admitted as a shareholder with respect to
Shares that may be issued upon the exercise of the
Option.  Notwithstanding the preceding sentence, in the event of an
extraordinary cash dividend or distribution, the Committee shall make
appropriate and equitable adjustments to the number of Shares subject to this
Option and/or to the exercise price hereof as the Committee determines in its
sole and reasonable discretion are necessary to prevent dilution of Employee’s
rights hereunder.  The Committee’s determination with respect to any
such adjustments under this Section 8 shall be conclusive and binding on the
Employee.

     

    9. Securities
Law Considerations.
If at any time during the term of the Option, the Company shall be
advised by its counsel that Shares issuable upon exercise of the Option are
required to be registered under the Federal Securities Act of 1933, as amended
(the “1933 Act”), or under applicable state securities laws, or that delivery of
such Shares must be accompanied or preceded by a prospectus meeting the
requirements of the 1933 Act or of any applicable state securities laws,
issuance of Shares by the Company may be deferred until such registration is
effected or a prospectus available or an appropriate exemption from registration
is secured.  The Employee shall have no interest in the Shares covered
by this Option unless and until such Shares are issued.  The Employee
agrees and acknowledges that the Option may not be exercised unless the
foregoing conditions are satisfied.

     

    10. Subject
to the Plan.  This Agreement shall be subject to and governed
by all the terms and conditions of the Plan.  A copy of the Plan has
been delivered to the Employee and is hereby incorporated by
reference.  In the event of any discrepancy or inconsistency between
the terms and conditions of this Agreement and of the Plan, the terms and
conditions of the Plan shall control.

     

    11. Code
Section 409A.  This Option is
intended to be exempt from Section 409A of the Code, and the regulations and
guidance promulgated thereunder (“Section 409A”).  Notwithstanding the
foregoing or any provision of this Option to the contrary, if any provision of
this Option contravenes Section 409A or could cause the Employee to incur any
tax, interest or penalties under Section 409A, the Board may, in its sole
discretion and without the Employee’s consent, modify such provision to comply
with, or avoid being subject to, Section 409A, or to avoid the incurrence of
taxes, interest and penalties under Section 409A.

     

    12. No
Assurance of Continued Employment by the Company.  The granting
of the Option is in consideration of the Employee’s continuing as an employee of
the Company.  Notwithstanding the foregoing, nothing in this Agreement
shall confer upon the Employee any right to continue as an employee of the
Company, or affect the right of the Company to terminate the Employee’s
employment (subject to the terms of any separate employment contract) at any
time in the sole discretion of the Company, with or without cause.

     

    13. Interpretation.  The
interpretation and construction of any terms or conditions of the Plan, or of
this Agreement or other matters related to the Plan by the Committee shall be
final and conclusive.

     

    14. Enforceability.  This
Agreement shall be binding upon the Employee and such Employee’s estate,
personal representative and beneficiaries.

     

    15. Governing
Law.  This Agreement
shall be governed and construed in accordance with the laws of the State of
Delaware (regardless of the law that might otherwise govern under applicable
Delaware principles of conflict of laws).

     

     

    IN WITNESS WHEREOF, the
Company has caused this Agreement to be duly executed by its officer thereunto
duly authorized, and the Employee has hereunto set his or her hand, all as
effective as of the day and year first above written.

     

    


    
      
        	 	
                CPI Corp.,

                a
      Delaware corporation

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/Name	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 
	 	 	 	 
	 	 	EMPLOYEE: